Elinor Ostrom and institutional diversity

Institutional Diversity and Political Economy

By Paul Dragos Aligica

The issue of institutional diversity, a key theme in the work of the 2009 Nobel Prize in Economics co-recipient, Elinor Ostrom, is one of the major challenges confronting national states and global governance in our time. How can viable governance structures accommodate the persisting diversity of communities and societies? There is an intensifying heterogeneity of beliefs, values, identities, preferences and endowments clashing in a world transformed by globalization and an ongoing technological revolution. From global resources management and the “clash of civilizations” to municipal governance and community development, the social fact of “heterogeneity” is a constant source of social dilemmas, public choice, and collective action problems. Diverse values, identities, principles, and cultures clash in the global arena. Migration, increasing diverse populations inside nation-states, demographical and cultural trends: all challenge current governance systems not only at the global level but also, increasingly, at the local level. Technology itself generates new cleavages and communities, subcultures and identities. All these push to the forefront the problem of the possible institutional solutions, with an unprecedented intensity.

Yet, this strategy is ultimately deeply unsatisfactory, especially when it comes to its applied implications. The presence of resilient and widespread heterogeneity-related problems at each turn in practical affairs, reminds us that this strategy has — for practical purposes — a rather limited feasibility domain. What happens when we move from ideal-theory to real life situations; when “normalization” and “homogenization” are not viable alternatives? What happens when “consensus” does not exist? Is good or decent governance still possible between individuals sharing less and less beliefs, values, identities, and objectives? How far could a society or social system go in the direction of heterogeneity, still hope to achieve social coordination and cooperation, and be able to solve basic collective action and public administration problems?

Elinor Ostrom and her collaborators have opened up important lines of inquiry that have the potential to address these and related problems. They have explored the multiple ways how viable institutional arrangements are created and recreated by various communities in various circumstances all over the world. They analyzed how institutional diversity, organized in polycentric systems of multiple decision centers and overlapping jurisdictions, may offer possible solutions to the huge governance challenges created by heterogeneity. They pointed out that social heterogeneity and institutional diversity are two facets of the same phenomenon and governance formulas should acknowledge that reality. We need to go beyond the “one form, one size fits all” approach, beyond the institutional design views based on two and only two models: the state and the market.

Elinor Ostrom’s explorations into the domain of institutional diversity are addressing in a concrete and practice-relevant manner the measure in which it is possible to have an institutional order defined by freedom, justice, and peace. In an increasing interdependent world of diverse and conflicting beliefs, values and objectives, how is institutional diversity a possible solution? This is a discussion about the fundamental nature of governance (both domestic and international) in the new era; we are at the core of the major political and economic challenges of our age. At the same time, we are at the cutting edge of contemporary social science and political philosophy. The empirically grounded, applied institutional analysis of the possibility of governance in extreme conditions seems to be indeed defining a new intellectual and policy frontier. The pioneering work of Elinor Ostrom and her collaborators has made this possible.

Paul Dragos Aligica is a Senior Research Fellow in the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at George Mason University’s Mercatus Center, where he teaches in the graduate program of the Economics Department. He received his PhD in Political Science at Indiana University-Bloomington, where he was a student of Vincent and Elinor Ostrom at the Workshop in Political Theory and Policy Analysis. He is the author of five books, including Institutional Diversity and Political Economy: The Ostroms and Beyond, and numerous academic articles on institutional theory, public affairs, and political economy themes.

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